The rising economical paradigm: circular economy

With growing population and decreasing resources, we need transition to circular resource management and utilization instead of the current use-and-discard economy.

Circular economy is not a single branch of industry but a techno-economical paradigm and systemic way of thinking and organizing our society. It is comprises lean manufacturing, lean patterns of consumption, dematerializing, and delivering value rather than products. Circular economy touches most sectors of industry, including energy production, waste management and manufacturing.

Circularity calls for optimization at the systemic level, and across industries. It is not a purpose in itself but one means to sustainable development.

Circular economy builds on new value creation business models and market behaviors but also on innovations in technology. New technology breakthroughs provide potential disruptive entry points to launch new profitable business that at the same time applies the circular principles.

Why aren’t we going circular already?

Today, environmentally sustainable operation is on the agenda for most companies, many also recognizing the principles of circular economy as one means to sustainability. However, circular thinking has not (yet) become a true element of company core strategies and operations, due to varied issues.

The bottlenecks in transition to circular economy relate to regulation (e.g. waste, product safety, end-or-waste), cost and profit margins (e.g. additional materials processing and investments), technology needs, product quality (meeting with current product requirements), and market acceptance (virgin vs. recycled products through the value chain). Also, creating the markets and in particular the collaborative networks is critical as circular value chains call for deep cooperation and ecosystem thinking. Implementing circularity also adds an extra consideration to building business: how do we compromise between the many diverse regulatory, product quality and safety, sustainability etc. criteria that may pull to different directions, all while building viable business?

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The makings of successful circular concepts

Material circulation related business models are at the heart of circular economy. Oftentimes, it requires collaboration through the value network to renew the traditional manufacturing methods, product specifications, or material sourcing to leap into circular operation. Circularity may in fact require reorganizing the whole value chain. As a vehicle to collaboration, formal and informal ecosystems or networks are forming around materials circulation.

Many organizations have done good work in making the circular economy principles generally known and further inspiring the stakeholders to take action. Now it’s time to switch to active implementation.

We at VTT are in a unique position in the transition: with strong capabilities and networks in materials, processing technologies, business models, techno-economics, up-scaling, systemic modelling, and sustainability perspectives we together hold the keys to building successful concepts and solutions with our customers. We have many projects and topics already ongoing. We want to apply circular thinking through our whole project portfolio and make it mainstream!

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Inka Orko, Research Team Leader
VTT

 

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